1. Field of the Invention
The present disclosure relates generally to the field of evaluating the process for selling an entity, e.g., a company. More specifically, the present disclosure includes a method, machine, and computer program product for evaluating a sale process involving the sale of an entity.
2. Description of Related Art
There are several methods by which a company sells itself, a division of itself, or some of its assets (i.e., real, tangible, intangible, or intellectual property). For example, a public company can announce it has retained an investment bank and is “considering strategic alternatives.” The investment banker then solicits interest from potential buyers and selects the highest and best proposal. When a sale is consummated, the board of directors may obtain a “fairness opinion” from a nationally-recognized investment bank in order to determine the fairness, from a financial perspective, of the transaction. In another example, a company in Chapter 11 can seek court approval to sell assets free and clear of liens pursuant to Section 363 of the Bankruptcy Code. In this example, the sale may involve selection of a stalking horse bidder and then overbidding in an auction format in court. A third example of a different process involves owners of a private company selling the business to a loyal management team or heirs without a competitive process, using an investment banker to develop an opinion on value or asking a private equity firm their perspective on value and letting the buyer execute at this price. A fourth example is a parent company selling a small subsidiary and negotiating with only one or two parties with respect to purchase price.
In each of these circumstances, the entity being sold is, in one-way or another, exposed to the market to determine value. The process of market exposure, however, differs in each case. The process of exposure and the resulting value assigned to the target business by market forces may be controversial. For example, creditors in a bankruptcy plan or asset sale may allege that the process was created to favor an inside buyer. In other circumstances, a board of directors may find themselves with “Revlon duties” requiring that the target company put itself up for sale and a hostile acquirer may contend they were discriminated against in the sale process. Unfortunately, a faulty sale process can lead buyers to an inaccurate level for “market value,” often implying a lower value for the business than might otherwise be obtained in a competitive process that is conducted fairly, thoroughly, and in good faith. Accordingly, parties alleging that the sale process provides an accurate measure of market value (or those attacking the validity and resulting value of such process, including shareholders and creditors) can benefit from a methods, e.g., computer-implemented methods, machines, and program products to evaluate a sale process.